Raise your hand if you’ve ever felt personally victimized by high student loan payments. Refinancing might make you feel a little better. Think of it as a debt do-over, only this time you can save money instead of just borrowing it.
Refinancing is when you get to say ‘bye’ to your old loan and ‘hi’ to a new one with terms you like better. That might mean finding a new lender that pays off the old one in full. Then paying the new guys every month...until you’re either out of debt or refinance again. It’s the circle of loan life.
Depending on the new loan and lender, refinancing can help you:
Exactly how much you can save depends on your personal stats. But you can plug them into this calculator for a better idea.
There are a few important things to know before refinancing. Like that you can’t refinance with the federal gov. You have to use a private lender. So if you have federal student loans, you’ll be converting them to private.
That might not sound like a big deal. But it means you could lose out on certain perks available to people who owe Uncle Sam. Such as being able to pick a repayment plan based on your income or qualify for Public Service Loan Forgiveness one day.
On the bright side, some private lenders offer flexible options, like freezing payments if you lose your job. It pays to do your homework before picking one.
Yes. But you aren’t guaranteed to qualify for the kind of terms you may want. Luckily, there are a few things that can help you stand out like the star you are.
Refinancing can help you break up with high interest rates and high monthly payments. Terms vary a LOT by lender, so make sure you shop around. If you’re not ready to refinance yet, but might want to later, work on ways to make yourself more attractive to future lenders.
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